Personal insolvency figures hit six‐year high
Personal insolvency levels hit a six‐year high in the second quarter, according to the latest figures from the Insolvency Service.
Data for the period between April and June shows that 28,951 people were declared insolvent across England and Wales.
The last time a figure that high was recorded was in the first three months of 2012 and the Insolvency Service revealed that a rise in individual voluntary arrangements is the reason for the surge.
Personal insolvencies have increased by more than a quarter, when compared to the same three month period in 2017.
Of the total personal insolvencies, 62% were individual voluntary arrangements, with bankruptcies and debt relief orders accounting for 14% and 24% respectively.
Nearly 18,000 IVAs in the second quarter marked a 5.7% jump from the first three months of 2018 and represents “the largest quarterly number of IVAs since they were introduced in 1987” according to the report.
Company insolvency figures dropped between April and June when compared to the first quarter, although the rate was up year‐on‐year.
More than 3,900 companies entered insolvency in the quarter, of which 2,731 were creditors’ voluntary liquidations and 752 were compulsory liquidations.
A further 435 cases across England and Wales used other forms of insolvency, while the construction sector saw the most insolvencies in the 12 months until the end of June.
President of insolvency and restructuring trade body R3, Stuart Frith, attributed the rise in personal insolvencies to the fact that wage growth is barely ahead of inflation, and to the rise of the gig economy which provides little or no long‐term security.
He added that more consumers are turning to credit and that the average amount of debt per person is rising too, which places more pressure on personal finances.
For companies, continuous business rate increases are often cited as being a major factor behind rising insolvency rates.
By Phil Smith